Perennial China Retail Trust

http://infopub.sgx.com/FileOpen/RTO_Anno...eID=288497

just review original RTO of St James (not the presentation slides) - Appendix 2 Pages 27 - 29, china assets acquired at 25% discount while Singapore based assets to be injected at 100% of valuations. Overall discount for entire portfolio is 16.7%.

So for eg @ baseline $1.66, the actual value is $1.99, so at the revised RTO acceptance price of $1.335, the trio of towkays actually accepts shares at 32.9% discount.

PCRT @ $0.55 = St James $1.05, discounts =47.2%. Mkt missed something or GG blindsided by biased vested interests?

Blur, Biased & Vested
GG

(17-03-2014, 07:48 PM)greengiraffe Wrote: http://infopub.sgx.com/FileOpen/RTO_Anno...eID=288497

just review original RTO of St James (not the presentation slides) - Appendix 2 Pages 27 - 29, china assets acquired at 25% discount while Singapore based assets to be injected at 100% of valuations. Overall discount for entire portfolio is 16.7%.

So for eg @ baseline $1.66, the actual value is $1.99, so at the revised RTO acceptance price of $1.335, the trio of towkays actually accepts shares at 32.9% discount.

PCRT @ $0.55 = St James $1.05, discounts =47.2%. Mkt missed something or GG blindsided by biased vested interests?

Blur, Biased & Vested
GG

Your calculation looked correct .

I have also reviewed cimb Sell call issued today - its factually wrong on many fronts. Cma trades at 0.94x p/b (BV $1.84) not 0.87x. Newco shares issued at 0.8x p/b not 0.9x. Lastly PCRT shares should be viewed as a swap and no longer on its own merit hence PCRT p/b is irrelevant consideration. Moreover, report also failed to mention the challenges facing PCRT post rental guarantees.

http://infopub.sgx.com/FileOpen/eAnnc_CM...eID=274401

The following is CIMB Sell call on PCRT issued today.

CIMB: Perennial China Retail Trust |PDF

Is it worth the wait?
PCRT SP /PCRT.SI| REDUCE - Downgrade | S$0.55 - TP:S$0.50
Mkt.Cap: US$493.40m | Avg.Daily Vol: US$0.41m | Free Float: 44.00%
REIT| Author(s): Xuan TAN +65 6210 8698, Donald CHUA

________________________________________
▊ If St James’ reverse takeover of Perennial goes through, PCRT’s shareholders will be offered an option to swap their shares for those of a bigger real estate company with presence in Singapore and China. We do not like the deal as: 1) investors will probably have to compromise on yield; 2) investors will gain access to a portfolio with higher gearing and proportion of assets under development, thus higher risk, in our view; and 3) while we believe the S$0.70 offer price is fair, the issue price of PREHL at 0.9x NTA is expensive compared to Singapore developers at an average 0.74x P/BV. We downgrade our rating to Reduce from Hold and cut our RNAV-based target price by 13% as we increase our discount rate from 20% to 30%.

What Happened
Trading in both Catalist-listed St James Holdings (SJH) and PCRT was halted on 14 Mar for the announcement of: 1) the reverse takeover of Perennial Real Estate Holdings Pte Ltd (PREH) (incl. 27% stake in PCRT), after which SJH will be renamed Perennial Real Estate Holdings Ltd (PREHL) and transformed into a real estate owner, developer and manager in Singapore and China, and 2) voluntary conditional offer of S$0.70/unit for PCRT in exchange for PREHL shares issued at S$1.1756/share, conditional upon the completion of (1) above.

What We Think
Rationale. We believe the rationale of the proposed acquisition and offer is to gain better access to funding. Also, the consolidation of PREH and PCRT’s assets positions the company as a mixed development developer and clears the confusion on whether PCRT should be regarded as a yield play. We view the deal negatively. While we believe the offer of S$0.70 at 1x RNAV and 0.9x P/BV is fair, payment in PREHL shares complicates the issue. The issue price of PREHL translates to 0.9x P/NTA and 24x P/E, pricey in our view. Existing shareholders converting into PREHL would compromise on yield, accept higher development risks, higher gearing and wait a much longer time for the portfolio to complete development. While investors can buy PCRT at 0.7x P/BV to be exchanged for PREHL shares at 0.9x P/NTA, we believe PREHL’s shares may de-rate to an average 0.74x P/BV as well. CMA is trading at 0.87x P/BV, but 75% of its assets are operational, while 77% of PREHL’s assets are under development.

What You Should Do
Reduce exposure on potential overhang post the announcement.

(17-03-2014, 07:48 PM)greengiraffe Wrote: http://infopub.sgx.com/FileOpen/RTO_Anno...eID=288497

just review original RTO of St James (not the presentation slides) - Appendix 2 Pages 27 - 29, china assets acquired at 25% discount while Singapore based assets to be injected at 100% of valuations. Overall discount for entire portfolio is 16.7%.

So for eg @ baseline $1.66, the actual value is $1.99, so at the revised RTO acceptance price of $1.335, the trio of towkays actually accepts shares at 32.9% discount.

PCRT @ $0.55 = St James $1.05, discounts =47.2%. Mkt missed something or GG blindsided by biased vested interests?

Blur, Biased & Vested
GG

the trio of towkays must be happily accumulating today

Well, it seems I saw different view from buddies here.

The key valuation is the price paid for the Target Asset. Two key info for pricing are the NTA, and PBTMI. Base on the presentation slide, the numbers are NTA is 1956.5 mil, and PBTMI is 110.7 mil

The latest pricing of the Target Asset is 1560 mil. The PB is approx 0.8, and P/PBTMI is approx 14. The pricing is fair, but at the high side, IMO.

Next question is the GO price of 70 cents per share fair? Well, that need to understand the business of PCRT. Akan datang...

(not vested)

(17-03-2014, 08:32 PM)kayhian Wrote:

(17-03-2014, 07:48 PM)greengiraffe Wrote: http://infopub.sgx.com/FileOpen/RTO_Anno...eID=288497

just review original RTO of St James (not the presentation slides) - Appendix 2 Pages 27 - 29, china assets acquired at 25% discount while Singapore based assets to be injected at 100% of valuations. Overall discount for entire portfolio is 16.7%.

So for eg @ baseline $1.66, the actual value is $1.99, so at the revised RTO acceptance price of $1.335, the trio of towkays actually accepts shares at 32.9% discount.

PCRT @ $0.55 = St James $1.05, discounts =47.2%. Mkt missed something or GG blindsided by biased vested interests?

Blur, Biased & Vested
GG

the trio of towkays must be happily accumulating today

What are the implications? Does it mean if they accumulate enough on the open market >50% of PCRT's shares, it's a walkover?

(17-03-2014, 11:34 PM)MINX Wrote:

(17-03-2014, 08:32 PM)kayhian Wrote:

(17-03-2014, 07:48 PM)greengiraffe Wrote: http://infopub.sgx.com/FileOpen/RTO_Anno...eID=288497

just review original RTO of St James (not the presentation slides) - Appendix 2 Pages 27 - 29, china assets acquired at 25% discount while Singapore based assets to be injected at 100% of valuations. Overall discount for entire portfolio is 16.7%.

So for eg @ baseline $1.66, the actual value is $1.99, so at the revised RTO acceptance price of $1.335, the trio of towkays actually accepts shares at 32.9% discount.

PCRT @ $0.55 = St James $1.05, discounts =47.2%. Mkt missed something or GG blindsided by biased vested interests?

Blur, Biased & Vested
GG

the trio of towkays must be happily accumulating today

What are the implications? Does it mean if they accumulate enough on the open market >50% of PCRT's shares, it's a walkover?

Personally, I think baring unforseen circumstances, the swap deal is almost as good as done. PCRT has never seen daylight since IPO. Whoever wants out are cutting losses on the market - wiping the slate clean for hopefully a new start.

Whoever wants to stay are given an option to transform into a newco that bears similar characteristics to that of CMA (but not of its size and quality for sure adjusted for appropriate discount to RNAV). The nominal swap price of $0.70 is interestingly pegged to PCRT's IPO price (if my memory didn't fail me) which is what the trio of towkays are accepting for injecting their assets.

Fair deal or not - Mr Market will eventually find a right level. In any event the PCRT levels are not at an excessive premiums to traded levels in the last few months.

GG

St James shares up on reverse takeover news

Published on Mar 18, 2014


By Mok Fei Fei

INVESTORS lapped up news that entertainment operator St James Holdings will exit its current business and transform itself into a real estate player in a reverse takeover.

Shares of the Catalist-listed firm shot up one cent or 18.5 per cent to 6.4 cents yesterday, its first session of trading since it called for a trading halt last Friday at around 2pm, pending the announcement of the reverse takeover.

It proposes to acquire $1.56 billion of assets from listed property player Perennial Real Estate Holdings by issuing new shares.

St James will then place its existing hospitality and entertainment business into a new company that will in turn issue shares to existing shareholders of St James.

This will be followed by an offer to acquire all units of mainboard-listed Perennial China Retail Trust (PCRT) that it does not already own at a price of 70 cents per unit via a share swap.

St James will then be renamed Perennial Real Estate Holdings Limited (PREHL).

Brokerage DMG noted that the positive market reaction is to be expected as the deal will bring a new lease of life for both St James and PCRT.

PCRT's shares, meanwhile, rose modestly by half a cent or 0.9 per cent to 55 cents, as brokerage CIMB issued a sell call in the wake of the proposed deal.

CIMB analysts Tan Xuan and Donald Chua said in a research note that they view the deal negatively for PCRT given the offer to pay for the units through PREHL's shares.

They pointed out that at the issue price of $1.1756 per PREHL share, it translates to 0.9 times the price-to- net tangible asset and 24 times the price to earnings ratio, which is "pricey" in their view.

They added that existing PCRT shareholders converting their shares into PREHL would compromise on yield. PCRT shareholders would also have to accept higher development risks and wait a longer time for the combined company to complete its projects.

There are also concerns over the gearing of the new company, the CIMB analysts said. "With close to 77 per cent of the assets under development, we believe future capital requirements can be quite substantial."

feimok@sph.com.sg

Bought some at 0.55 , make or break ?

(17-03-2014, 12:00 AM)DP28 Wrote: Part 2 - valuation
St James current per share valuation after conso 50-1 = $0.054 x 50 = $2.70
If PCRT price at $0.70,

Given all pieces of information, PCRT shareholders seem to be getting a good deal.. IMO, the biggest loser may seem to be minority shareholder of St James given their share consolidation value at $2.70 vs issued of new price $1.1756. (however in any RTO, anything is possible and may trade higher than 5.4 cents). For PCRT share price movement it should track st james closely and vice versa.

Welcome any views.

The valuation is incorrect.

St James's current entertainment business and asset will be transferred out from the new company, PREHL. So the pre-consolidation valuation of 5.4 cents per share shouldn't be the valuation for the PCRT offer.

The reference should be the issue price of 2.67 cents per share for the acquisition of Target Assets.

(not vested)